Pegasus Airlines: delighting a new type of
travelling customer
Until 1982, Turkish Airlines was the only airline company operating in Turkey, and it had no
domestic competitors. Following deregulation and reduction of government controls across the
airline industry, 29 airlines were established, with 22 finding themselves bankrupted a few years
later, demonstrating the strong level of both internal and external competition and how the airline industry is affected by economic instability. Over the past 20 years, Turkey has experienced
a number of financial crises, as well as political turmoil. Pegasus was created in 1989 as a charter
airline partnered with Aer Lingus to create all-inclusive holidays. In 1994, the company was sold
to a Turkish investment fund and in 2005 was re-sold to Ali Sabanci (of Sabanci Holding, an
influential family-owned business in Turkey), who changed the airline from a charter airline to
a low-cost airline. In 2008, Pegasus carried a total 4.4 million passengers in Turkey, more than
any other private airline. However, by 2018 passenger traffic had exploded to around 29 million
passengers carried. As of 2019, Pegasus has a fleet of 83 Boeing and Airbus planes. Its major
competitors – other than the national carrier, Turkish Airlines – are Onur Air, Fly Air, Sun Express
and Atlasjet. Instead of operating from Istanbul’s main airport, which is overcrowded, Pegasus
Airlines flies from Istanbul’s second main hub, Sabiha Gökçen International Airport. Its on-time
departure rate is around 85 per cent, which is well above the European average of 81 per cent,
demonstrating the importance the company attaches to customer service. In 2017, Pegasus
was awarded the title ‘The Best Low-Cost Airline’ and has been named the cheapest European
low-cost airline numerous times.
What is the secret to the airline’s success? Quite simply, it involves making sure Pegasus
is continually developing to meet passenger expectations and priorities. Pegasus has put in
place a yield management strategy for ticket pricing, using the strategy of Southwest Airlines
of North America as an example. Supply and demand, as well as time, are taken into account in
the ticket pricing strategy; for example, if customers book early (60 days) they receive further
savings while those who book later pay the maximum current fare offered by competitors. The
system is complemented by an electronic ticket policy whereby passengers receive their information via email and SMS. Pegasus has also developed a credit/loyalty card (the Pegasus Plus
Card), which offers customers a range of benefits including insurance rate reductions. Although
airlines can’t often control flight delays, Pegasus has developed a specific customer satisfaction
guarantee policy that provides customers with (i) in the case of a delay greater than 3 hours, a
refund of the ticket and (ii) in the case of a delay greater than 5 hours, a refund and a free ticket.
Pegasus also offers a customer service experience at the airport. It provides exclusive allotments
for the first 72 hours of parking with a valet parking option, VIP and Business Class lounges, car
rental and many hotel partners where customers can get some
discount. Unlike many airlines, a one-class interior configuration
is operated, but passengers can pay a small extra premium to
choose their seats. This is complemented by the Pegasus Flying
Café, which offers a range of refreshments and catering options
for a small additional charge, allowing customers to pre-order
and reserve their inflight meals. Pegasus offers further customer
service options, including a 10 per cent discount to passengers
on international flights who order their in-flight meals 48 hours
in advance. An in-plane bulletin is also available, with a mix of
offers and features on certain destinations. This bulletin is free
for customers but generates income via advertising. These services are supported by Pegasus’s own flight crew training centre
and maintenance organisation, Pegasus Technic. Both are fully
licensed and are used to train new staff members. The company
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Pegasus Airlines – customer
focused value creators.
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Part 1 Defining marketing and the marketing process
regularly receives awards and recognition for, among other things, its management strategy;
initiatives in website development; and its marketing strategy, which employs a new approach to
advertising that includes viral marketing, flash campaigns and mobile campaigns. This strategy
has succeeded in making Pegasus the most searched airline in Turkey on Google.
Although the tangible amenities that Pegasus offers are likely to delight most travellers,
General Manager Sertaç Haybat, recognises that these practices are not nearly enough to provide a sustainable competitive advantage and that Pegasus must always present its customers
with the most economical flight opportunities. Here the importance of the crew training centre
remains crucial. Haybat emphasises that a culture that breeds trust is the most crucial factor.
It’s this personal culture that gives Pegasus’s customer service an edge. Indeed, taking care of
customers starts as early as a customer’s first encounter with the Pegasus brand and website.
Pegasus’s employees work as a team with their goal being a common understanding of the
airline’s long-term objective to provide a democratic environment in which everyone shares
their ideas freely. Training, as well as continuous development, is provided to ensure regular
career progression and high levels of motivation through a solid performance system and regular personal feedback. Early in the process, Pegasus selects the people who best exhibit these
values while directing the right person to the right department at the right time. The last tenet of
Pegasus’s customer-service strategy lies in the regularly scheduled and innovative destinations it
offers. Not only does Pegasus share planes with Pegasus Asia and Izair, but it also has charter and
scheduled services to around 120 airports in Europe and Asia. Pegasus operates regular flights
to Georgia and Lebanon, providing additional destinations outside of Europe, thus maximising
Turkey’s short flight opportunities. This prompted speculation in the media about the changing
preference of air travellers where low-cost companies are seen as a sustainable substitute to
middle- and high-cost traditional carriers.
Customers are the most important aspect of any service industry. Since the global recession,
many airlines have seen a drop in passenger numbers, and it is a challenge to achieve and sustain profitability. In the case of Turkey, other factors provide further opportunities for the airline
industry. On the one hand, the economy is growing at a faster rate than the rest of Europe,
and on the other hand, as is the case in many emerging countries and in traditional industrial areas of developed economies, a substantial expatriate population exists. New migrants
or integrated second- or third-generation migrants usually provide opportunities for travel due
to cultural affinities and understanding. Regular holidays or business-related trips ‘home’ can
create a good foundation in terms of overall capacity planning. In terms of weekly seat capacity,
Pegasus currently ranks in the top 30 among European airlines. While most airline customers
are loyal because of frequent flyer programmes, in the case of Pegasus and Turkey in general,
further affinities can be developed and sustained, including a certain sense of nationalist pride
or nostalgia. History can also provide potential future markets. Countries such as Azerbaijan,
Turkmenistan, Uzbekistan and others around the Black Sea region are long-term trading partners
of Turkey and have been growing rapidly since the breakup of the USSR in 1991. This potential is
also opening up opportunities with countries in the Middle East, which have large, young markets both in terms of tourism and business. However, Pegasus customers want more in terms
of social network relationships with the brand and, therefore, Pegasus aims to keep up with its
customers even when they are not flying. For example, Pegasus has a Facebook page complete
with a game entitling customers to win free tickets. The company also has a Twitter account,
through which it offers customers special competitions. Furthermore, in association with Vodafone, a special campaign was developed called ‘mobile phone fly’, whereby consumers accumulated for each SMS an award of 5 per cent toward a Pegasus ticket discount, emulating the
‘shop and miles’ strategy of traditional airlines. Over time, Pegasus hopes to create a sustainable
relationship with its customers while leveraging the possibilities of social networks and other
digital technologies. Pegasus’s strong word of mouth has also been important in the airline’s
success and is reflected in the words of customers on a special website titled ‘Pegasus listens to
you’. Sections of the website encourage customers to generate ideas for service improvement,
to debate generic questions and topics relating to the airline’s management and services, and
to encourage customers to report problems they have encountered. Since its formation in 2005,
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Chapter 1 Marketing: creating customer value and engagement
Pegasus has shown that a low-cost airline can deliver low fares, excellent service and steady
profits. It has demonstrated that even in the airline business, entry barriers can be lowered and
a powerful brand can be created. Pegasus embodies success in four marketing cornerstones: (i)
it ensures successful service through safety, training and its devoted employees, (ii) it employs
creative communication with its customers, (iii) it offers great destinations and easy access
to international hubs, and (iv) it uses efficient management techniques, delivering low prices
with a high-quality service experience. To be successful in the low-cost airline industry, great
attention needs to be paid to customers’ changing travel patterns and needs. Booking flights,
post-purchase evaluation through regular customer relationship management, and intangible
value created by a variety of details make Pegasus a formidable brand in the low-cost airline
industry.1
Today’s successful companies have one thing in common: Like Pegasus, they are strongly customer focused and heavily committed to marketing. These companies share a passion for satisfying customer needs in well-defined target markets. They motivate everyone in the organisation
to help build lasting customer relationships based on creating value.
Customer relationships and value are especially important today. Facing dramatic technological advances and deep economic, social and environmental challenges, today’s customers are
reassessing how they engage with brands. New digital, mobile and social media developments
have revolutionised how consumers shop and interact, in turn calling for new marketing strategies and tactics. It’s now more important than ever to build strong customer engagement,
relationships and advocacy based on real and enduring customer value.
We’ll discuss the exciting new challenges facing both customers and marketers later in the
chapter. But first, let’s introduce the basics of marketing.
What is marketing?
Marketing, more than any other business function, deals with customers. Although we will soon
explore more detailed definitions of marketing, perhaps the simplest definition is this one:
Marketing is engaging customers and managing profitable customer relationships. The two-fold
goal of marketing is to attract new customers by promising superior value and to keep and grow
current customers by delivering value and satisfaction.
For example, Dyson’s underlying philosophy of taking everyday products that don’t work
particularly well and making them more efficient, more effective and simply better has rocketed
Dyson to (well-deserved) global success. Facebook has attracted more than 1.5 billion active
web and mobile users worldwide by helping them to ‘connect and share with the people in their
lives.’ While Virgin Atlantic fulfils its motto to ‘embrace the fun spirit and let it fly’ through being
hugely attractive and responsive to customer needs, wants and demands. Similarly, Coca-Cola
has earned an impressive 49 per cent global share of the carbonated beverage market – more
than twice Pepsi’s share – by fulfilling its ‘Taste the Feeling’ motto with products that provide ‘a
simple pleasure that makes everyday moments more special’.2
Sound marketing is critical to the success of every organisation. Large for-profit firms, such as
Unilever, Nestlé, Shell and Santander use marketing. But so do not-for-profit organisations, such
as colleges, hospitals, museums, symphony orchestras and even churches.
You already know a lot about marketing – it’s all around you. Marketing comes to you in the
good old traditional forms: You see it in the abundance of products at your nearby shopping
centre and the ads that fill your TV screen, spice up your magazines or stuff your mailbox. But in
recent years, marketers have assembled a host of new marketing approaches, everything from
Author
comment
Pause here and think
about how you’d answer
this question before
studying marketing. Then
see how your answer
changes as you read the
chapter.
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